2013 Texas Ethics Opinion 627  indicates that lawyers can eventually dispose of client files, but provides no indication of what period of time constitutes a proper “passage of time.” The opinion is based on assumed facts that a law firm uses a 5 year retention period. Two recent opinions in other states do suggest a minimum time to keep files.

A Tennessee opinion released in December suggests a minimum of 5 years. A Kansas opinion released in September suggests a minimum of 10 years.

Don’t like those time frames? New Jersey suggested 7 years in a 2002 opinion unless the client had consented to a shorter time frame. Many firms have adopted a 7 year time frame, as this coincides with limitations on certain tax claims that IRS could pursue.

Texas Requirements

The length of time a lawyer uses to retain files might not be as important as having other components of a file retention policy. Texas Opinion 627 provides the following as the primary principles for ethical file destruction:

1. Protection of confidential information.
2. Turning over the file to the client if requested.
3. Taking reasonable steps to avoid destruction of items that might harm client material interests.

Destruction of files should be done in a manner to assure that client confidences, and confidence of non-clients protected by law, will not be violated. Failure to do so risks not only ethical sanctions, but also statutory penalities.

Many lawyers consider file notes to be their property, but Texas and most other states have taken a whole file approach that includes attorney note to what must be turned over to a client on request. Keep this in mind when deciding what notes to generate and keep in firm files.

Files may contain items such as original documents that are still valuable to a client, even if details regarding representation are no longer necessary. The Texas opinion requires some review of files to find items such as notes and original documents that could have continuing value to clients.

Rule 15.10 of the Texas Rules of Disciplinary Procedure requires that trust account records must be retained for 5 years, and Texas Rule of Civil Procedure 76a considers certain settlement agreements and discovery materials to be court records that must not be destroyed.

Other considerations

The Texas opinion states that other law may address issues that are not within the realm of ethical concerns. These issues may include the length of time that files should be stored, whether lawyers must give notice to clients of their file retention policies, and whether files may be converted to electronic media or copied.

A systematic file retention and destruction policy is superior to either no policy or random destruction of files in the event of a claim. If files are destroyed only as a lawyer runs out of room or when there is time to do so, failure to have a file could be viewed as spoliation of evidence in some circumstances. Also keep in mind that electronic documents should be addressed in any policy.

The Kansas opinion alludes to another an interest law firms have in file retention. Firms should take into account possible statutes of limitation. In general, lawyers are better off having the file if sued for malpractice. Occasionally the file proves malpractice, but more frequently it helps explain exactly what action the lawyer took and why.

In Texas, the statute of limitations for legal malpractice is a two year discovery rule, but breach of fiduciary duty is a four year rule. Discovery rules mean that the limitation period is counted from the time that a client knew or should have known that the legal services provided were improper, rather than from the time when the lawyer made a mistake. Other tolling issues can arise, such as minority of a client, or tolling while appeals are in progress. There is no statute of repose, a maximum time for bringing a claim when tolling applies. In one case, a Texas court did not apply limitations to a claim brought almost 20 years after provision of legal services.

Ideally, lawyers can evaluate files at the time they close for reasons that a default retention period should not apply. With some types of practice, a firm may want to choose a longer default time for some kinds of representation, and shorter for others. For example, matters in which a judgment was obtained in favor of the client, but not collected, might warrant keeping the file longer in the event that the client wishes to renew the judgment or pursue new collection efforts. Some types of transactions could take a long time for problems to manifest, such as patent and estate planning matters.

All of the opinions indicate that the lawyer and client can agree about file retention and destruction. We suggest that you consider including minimum retention time in your engagement and end of representation documentation that meets your needs to retain the file. Valuable documents can be returned to the client for safekeeping at the conclusion of representation to help with ultimate disposition of the file. Also, lawyers may want to consider destroying documents that are retained in public records or easily obtainable from other sources to reduce storage space. If you are beginning a file retention and destruction policy after accumulating documents, you may need to contact clients regarding your intention to destroy files and offer them an opportunity to retrieve the files.

File retention and destruction is not a glamorous aspect of law practice, but one which deserves attention from all lawyers. Creating a policy and following it is both ethical and practical, as indefinite long term storage and maintenance of records is expensive.